(March 6, 2020) The Catholic church has been busy moving assets to make less compensation money available to priest sex abuse victims. The church is estimated to have transferred at least $2 billion in assets since it was recently hit with the latest revelations of clergy sex abuse of minors.
To keep more assets in the church and out of the pockets of victims, more and more dioceses are declaring bankruptcy and moving quickly to reclassify holdings in order to lower the value of their bankruptcy estates.
Bloomberg News reports that in New Mexico, church lawyers have transferred to the parishes ownership of several churches in the Archdiocese of Santa Fe. Doing so excludes the churches from the bankruptcy estate.
Examining one diocese’s bankruptcy suggests a route others may follow. A Chapter 11 filing of the Santa Fe archdiocese shows how easy it can be to manipulate a balance sheet.
The Santa Fe archdiocese faced a few dozen clergy abuse lawsuits when it filed Chapter 11 in December 2018, claiming it lacked funds to defend itself. By the June 2019 deadline to file a claim, the number of abuse lawsuits rose to some 375 cases.
Church worth $49 Million? Or $227 Million?
The archdiocese reported that it owned $49 million in real estate, cash, and investments. That total included its Albuquerque headquarters, corporate and municipal bonds, some cars and pickup trucks, and an unspecified quantity of gold and silver. By contrast, Bloomberg reported the church’s 1951 incorporation papers estimated its value at $40 million, or $396 million in 2020 dollars.
Church leaders arrived at the $49 million by declaring that $178 million in cash and property “associated with” the archdiocese were owned by parishes or held in a trust or foundation, thus making those assets eligible for inclusion in the (“bankrupt”) estate. Victims’ lawyers, meanwhile, argue there’s no real separation between the archdiocese and its parishes; therefore, the $178 million should be included in the available funds. That would raise the value of the estate to as much as $227 million, a far cry from the $49 million claimed by the church.
The Politics of a Church “Bankruptcy” Claim
In November 2012 — the year the Santa Fe church began “reorganizing” — business managers for 90-some northern New Mexico parishes gathered in Albuquerque. Archdiocese chief financial officer Tony Salgado addressed them there. He explained to the managers how to incorporate their parishes separate from the archdiocese.
“We got step-by-step instructions,” explained Christine Romero, then Santa Fe’s St. Anne’s parish business manager. The legal change would let the archdiocese assert that each parish was a distinct organization owning its own property. Bloomberg reported that records around that same time show church leaders created the Archdiocese of Santa Fe Real Estate Corp., and began transferring hundreds of properties into it.
“Just to Protect us from Pedophile Lawsuits”
Ms. Romero said that when she raised her hand and asked how the separate incorporations would affect the parishes, Tony Salgado said the move wouldn’t change day-to-day operations.
“It’s just to protect us from the pedophile lawsuits,” said Mr. Salgado, according to Ms. Romero. Mr. Salgado declined to comment to Bloomberg for its story last month.
The net effect of such church “bankruptcies” is clear: the church is now further abusing the already abused. That is a crying shame, and church leaders should be ashamed of themselves, because victims of clergy abuse face a greatly reduced chance of financial success, as well as an overwhelming need for psychological counseling that is anything but cheap.
Victims’ Costs more than $280,000
A study has shown that childhood sex abuse victims suffer more mental and physical health problems than those who were not abused. They also have lower lifetime earnings than those who were not sexually abused as minors. According to a 2018 study by the Johns Hopkins Bloomberg School of Public Health, victims’ costs can run more than $280,000 over a lifetime. And that’s only a discussion concerning the financial costs of abuse.
Pope Francis has vowed that the Catholic church will be more transparent in the future with its parishioners and the public. However, the church’s duplicitous actions in shuffling assets around and declaring bankruptcy to avoid fairly compensating people sexually abused as children, harms not only the victims, but the church, the institution itself. These underhanded actions harm the church’s own chances to ever dig itself out of the moral hole into which it has dug itself, in coddling pedophile priests at the expense of the people who trusted them, and trusted in the church.
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by Matthews & Associates
